WHY ALL THE COMPANIES ARE LOOKING TO DEVELOP A EXISTING PRODUCT OR INTRODUCING A NEW PRODUCT ?

# “ When the changes outside is better

than changes inside, the end is near ”.

# To make more profit.

# To expand their market.

NEW PRODUCT DEVELOPMENT

Definition:

Development of original products, product improvement, product modification, inventing new product through the firm’s own R&D efforts.

PROCEDURES OF NEW PRODUCT DEVELOPMENT

IDEA GENERATION

Internal source # Research and Development # employees

External source # customers # competitors # suppliers # distributers

IDEA SCREENING

Process to spot a good idea and drop poor ones

# Selecting an idea which is feasible and workable to develop.

# Online blogs may discuss customers

dissatisfaction with a certain product, which may provide ideas to inventors or a new product or service.

.

CONCEPT DEVELOPMENT AND TESTING

It provide full details of the new product’s idea. # Will it be practical and feasible?

# What benefits the product will provide ?

# How will consumers react to the product?

# What will it cost to produce it ? # Testing the concept by asking a number of

customers what they think of the idea

MARKET STRATEGY & DEVELOPMENT

A proposed marketing strategy will be written laying out the marketing mix strategy of the product, the segmentation, targeting and positioning strategy sales and profits that are expected.

BUSINESS ANALYSIS

The business analysis stage looks more deeply into the Cash flow the product could generate, what the cost will be, how much market shares the product may achieve and the expected life of the product.

PRODUCT DEVELOPMENT

At this stage the prototype is produced. The prototype will clearly run through all the desired tests, and presented to a selection of people made up of the target market segment to see if changes need to be made.

TEST MARKETING

Test marketing means testing the product within a specific area. The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed modified before national launch.

COMMERCIALIZATION

There are certain factors that need to be taken into account before a product is launched nationally. These include:

timing of the launch, how the product will be launched, where the product will be launched, will there be a national roll out or will it be region by region?

CONT…

Finally the commercialisation stage involves careful planning to maximise product success, a poor launch will affect product sales and could even affect the reputation and image of the new product.

PRODUCT LIFE-CYCLE STRATEGIES

# The Product Life Cycle (PLC) has Five

Stages. # Product development # Introduction # Growth # Maturity # Decline

PRODUCT LIFE CYCLE

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

PRODUCT LIFE-CYCLE STRATEGIES

Product development

Introduction Growth Maturity Decline

Begins when the company develops a new-product idea

Sales are zero Investment costs are

high Profits are negative

PLC Stages

PRODUCT LIFE-CYCLE STRATEGIES

Product development

Introduction Growth Maturity Decline

Low sales High cost per customer

acquired Negative profits Innovators are targeted Little competition

PLC Stages

MARKETING STRATEGIES:

INTRODUCTION STAGE

Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective

distribution Advertising – Build awareness among

early adopters and dealers/resellers Sales Promotion – Heavy expenditures

to create trial

PRODUCT LIFE-CYCLE STRATEGIES

Product development

Introduction Growth Maturity Decline

Rapidly rising sales Average cost per

customer Rising profits Early adopters are

targeted Growing competition

PLC Stages

MARKETING STRATEGIES:

GROWTH STAGE

Product – Offer product extensions, service, warranty

Price – Penetration pricing Distribution – Build intensive

distribution Advertising – Build awareness and

interest in the mass market Sales Promotion – Reduce

expenditures to take advantage of consumer demand

PRODUCT LIFE-CYCLE STRATEGIES

Product development

Introduction Growth Maturity Decline

Sales peak Low cost per customer High profits Middle majority are

targeted Competition begins to

decline

PLC Stages

MARKETING STRATEGIES:

MATURITY STAGE

Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensive

distribution Advertising – Stress brand differences and

benefits Sales Promotion – Increase to encourage

brand switching

PRODUCT LIFE-CYCLE STRATEGIES

Product development

Introduction Growth Maturity Decline

Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition

PLC Stages

MARKETING STRATEGIES:

DECLINE STAGE

Product – Phase out weak items Price – Cut price Distribution – Use selective

distribution: phase out unprofitable outlets

Advertising – Reduce to level needed to retain hard-core loyalists

Sales Promotion – Reduce to minimal level

OPERATIONS OF NEW PRODUCT DEVELOPMENT

New Product Lines: They allow the business to enter a completely new market segment.

Additions to existing Product Lines: These are new items to the business, but they fit within an existing product line that the business already produces. They may represent a fairly new product to the market.

Repositioning: These are new applications for existing products. They involve the retargeting of an old product to a new market segment.

CONT…

Improvements and Revisions to Existing Products: These “not so new” products are replacements of existing product lines. These “new and improved” product lines are incremental innovations . Cost Reductions: designed to replace existing

product lines while providing similar benefits and performance but at significantly lower costs to the business.

Thank you